Will companies and investors save the day in Paris: what to expect from COP 21 – by Philipp Pattberg and Oscar Widerberg

Whatever the results of the upcoming UNFCCC meeting in Paris (COP 21), Philipp Pattberg and Oscar Widerberg believe that international climate politics needs a boost.

Even if all pledges communicated by governments in their ‘Intended Nationally Determined Contributions’ (INDCs) are met, global temperatures will still rise with nearly 3° Celsius by the year 2100, compared to pre-industrial levels. The international community will thus miss its own 2° target set in 2010. Additional action is needed to get climate politics back on track.

In the run-up to Paris, companies and investors have been identified as having the potential to close the existing ambition gap. By making public commitments and supporting ambitious climate policies, many companies are taking an active and public role in global climate policy. Examples are Microsoft’s ‘Carbon Fee’ model, setting a company-wide internal carbon price, IKEA’s €1 billion pledge to fight climate change, and Unilever’s high-profile engagement with sustainability issues. In addition, companies started to form cooperative initiatives, collaborative arrangements between stakeholders such as companies, regions, cities, NGOs and countries that aim at implementing concrete climate actions.

By some accounts, the potential impact of non-state actors, including companies, could be substantial. PwC, a consultancy, estimated that one cooperative initiative – the Low Carbon Technology Partnership initiative (LCTPi), comprised of some 140 companies and additional 50 partners, could generate 65% of the global GHG reductions needed to achieve the 2 degree target.

What is needed to harness this potential? The previous and current COP presidencies in Lima and Paris, together with the UNFCCC secretariat, have actively supported companies by providing them with a podium to share commitments and collaborations. During COP20 in Lima in 2014, the ‘Lima – Paris Action Agenda’ (LPAA) was launched, aiming to boost non-state climate action by companies, investors, cities, and regions. A Non-State Actor Zone for Climate Action (NAZCA) has been launched and linked to the UNFCCC homepage, providing a forum for companies and other non-state actors to show-case their climate commitments. To date, NAZCA contains over 10,000 climate commitments by companies, investors, cities and regions. It also engages over 700 companies in over 20 different cooperative initiatives.

In a study to be launched at a side-event in Paris, we take a closer look at companies in cooperative initiatives. In total, we scrutinized climate actions by over 2,100 companies spread across over 100 cooperative initiatives registered in NAZCA and part of the CONNECT data set (see CONNECT project at www.fragmentation.eu).

The last few years have witnessed an explosion of companies and investors engaging in climate action in a wide variety of ways. And that these actors hold great potential to contribute to emissions reductions is equally obvious. However, while the overall picture that emerges is cautiously positive, we have identified a few pressing challenges.

First, the geographical distribution of companies is heavily skewed towards the Global North. The vast majority of the companies in our study are headquartered in OECD countries, in particular in industrialized countries such as the United States, United Kingdom, Netherlands, Germany and Sweden. Similarly, in terms of numbers, the lion’s share of all companies comes from sectors with relatively small carbon footprints such as service sectors and finance.

Second, a few key players are more engaged than others. Of the 775 companies and investors in the NAZCA data set, 100 participate in more than one cooperative initiative. The Dutch electric appliances company Philips, for instance, is part of 30% of the cooperative initiatives with companies in NAZCA. We identify 15 leading companies in terms of participation and found that, somewhat worryingly, their performance in terms of reducing greenhouse gas (GHG) emissions is mixed at best.

Third, we examined the potential versus achieved GHG reduction of companies in cooperative initiatives and found large discrepancies between expectations and reality. Moreover, in some instances, the intensity of GHG emissions per unit of product has been reduced considerably, while due to overall growth, the net effect in terms of carbon emissions is positive.

Fourth, ex-post data on performance in cooperative initiatives is largely unavailable. There are very few openly accessible progress reports on how companies are doing on their cooperative imitative commitments, and even fewer repositories for registering them.

Against this background, what could governments do in Paris to create an enabling environment for companies to accelerate climate action and overcome the challenges listed above?

First, building on NAZCA and similar data repositories, the creating of a common accounting framework could strengthen their legitimacy by recording real progress.

Second, based on a common assessment framework, leaders and laggards could be more easily identified, allowing for learning and knowledge exchange across different communities. Also, this would improve our understanding why some cooperative initiatives and their participants do better than others.

Third, encouraging more companies and cooperative initiatives from the Global South and emerging economies could address actions where they have the chance to make large, long-term effects.

Governments have started to recognize the positive contributions of companies taking climate actions. Companies on their side, increasingly make public commitments to take action. It is now important that this positive momentum continues after Paris to harness the mitigation potential inherent in collaborative arrangements on climate change.

For more information come to the launch of the report on an official side-event in Paris, Thursday 10 December, 16:45 to 18:15, Room OR 01 on “Mobilizing Ambitious State and Non-State Climate Action in the Paris Agreement and Beyond”

Philipp Pattberg is professor of transnational environmental governance and policy at VU University Amsterdam, The Netherlands. He specializes in the study of global environmental politics, with a focus on climate change governance, biodiversity, forest and marine governance, transnational relations, public-private partnerships, network theory and institutional analysis. Pattberg’s current research scrutinizes institutional complexity, functional overlaps and fragmentation across environmental domains (http://fragmentation.eu/). He is the co-editor of the recently released Encyclopedia of Global Environmental Governance and Politics published by Edward Elgar.

Oscar Widerberg is a researcher at the Institute for Environmental Studies (IVM) at Vrije Universiteit Amsterdam. He works on fragmentation in global environmental governance, primarily on climate change, as a core member of the CONNECT-project (www.fragmentation.eu). Oscar is interested in the connections between state and non-state actors, examining institutional complexity and fragmentation using network analysis. He is a fellow to the Earth System Governance project, member of the Swedish think tank FORES Reference Group on International Climate Policy, and of INOGOV’s Early Career Investigators’ Network (ECIN).